“It will be especially important to evaluate incoming information to assess the underlying pace of economic recovery,” in light of the “somewhat different signals” received recently from the labor market than from indicators of final demand, Bernanke said in testimony prepared for the House Financial Services Committee. Follow live blog of Bernanke testimony.

In his testimony, Bernanke stopped short of saying the improvement in the unemployment rate meant a better economy ahead. But if it was enough of a hint of less accommodation to drag gold futures
GCJ2
lower by around $50 an ounce.

“Chairman Bernanke’s semi-annual monetary policy testimony did not provide the ‘we’re doing QE3’ bombshell that at least a few market participants evidently were positioned for,” said Stephen Stanley, chief economist of Pierpont Securities.

The unemployment rate dropped to 8.3% in January after hovering close to 9% for much of 2011. This puts the jobless rate near the bottom of the Fed’s forecast for all of 2012.

Bernanke said the Fed expects the unemployment rate to edge down only slowly for the year.

He said that any continued improvement in the job market “is likely to require stronger growth in final demand and production.”

He called the job market “far from normal” despite the recent drop in the jobless rate.

“With output growth in 2012 projected to remain close to its longer-run trend [growth of 2.3%-2.6%], FOMC members did not anticipate further substantial declines in the unemployment rate over the course of this year,” Bernanke said.

“The recovery of the U.S. continues, but the pace of expansion has been uneven and modest by historical standards,” Bernanke told the committee.

Fed officials have forecast growth in a range of a 2.25% -2.7% rate for 2012. With this moderate growth, the Fed does not anticipate further “substantial declines” in the jobless rate, he said. Read story about U.S. growth in fourth quarter.

The Fed also expects inflation to run in a range of 1.4-1.8% this year, below the Fed’s goal of 2%.

Problems in the housing market continue to hold down the economy, including household wealth and confidence, he said.

Against this backdrop of restrained growth, “persistent” downside risks to the outlook and moderating inflation, the Fed amended its forward guidance in January, saying that economic conditions were likely to warrant exceptionally low levels of the federal funds rate to at least through 2014.

This is longer than the prior statement last fall that rates could stay low until mid-2013.

“With the unemployment rate elevated and the inflation rate subdued, the FOMC judges that sustaining a highly accommodative stance for monetary policy is consistent with promoting both objectives,” Bernanke said.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.